Last November, Random House announced the inauguration of three new digital imprints: Hydra for science fiction, fantasy and horror; Flirt for "new adults"; and Alibi for mystery and suspense. Random House, of course, has many imprints, but what was unusual about these imprints is that they were digital only. Even more unusual was the fact that authors could submit their manuscripts directly to Random House - without an agent. Major publishers have not allowed unchaperoned authors to enter their hallowed halls for decades.

The announcement, though welcomed by potential authors, was received with skepticism by those who knew better; In the publishing industry the deck is always stacked in favor of the house. The House, in this case, was offering "revenue sharing" in place of an advance. Random House was also requiring authors to foot the expenses of production, and, most onerous of all, demanding rights for the term of the copyright. (Why even have a copyright in that case?) John Scalzi called the Random House conditions "a horrendously bad deal" and advised authors to "run away" as fast as their legs could carry them.

Random House eventually bowed to pressure and offered a more traditional deal for writers. Apparently, that deal was sweet enough to attract several new authors. Of the six titles Alibi will release next year, five are by debut authors.

RH Imprint Alibi Announces Debut Titles

Publisher's Weekly, August 14, 2013

Alibi, the digital-original mystery and thriller imprint of the Random House Publishing Group, announced the acquisition of its first six titles. The new publishing program will launch with The Last Clinic by Gary Gusick, the first novel in the Darla Cavanaugh mystery series.

Alibi senior editor Dana Isaacson has also acquired the following titles, scheduled for release in late 2013 and throughout 2014: The Garden Plot, by Marty Wingate; The Final Age, by Pierre Ouellette; Maxwell Street Blues by Marc Krulewitch; The Travel Writer by Jeff Soloway; and A Penny for the Hangman by Tom Savage.

President Obama's recent public endorsement of Amazon - delivered in Amazon's warehouse in Chattanooga, Tennessee no less - has generated a firestorm of criticism from just about everybody: the GOP (which considers anything Obama says to be an "old idea"), The American Association of Booksellers (which called it "greatly misguided"), and competing online booksellers (which immediately dropped their prices in response to Obama's "grand bargain" comment). 

The truth is that even though Amazon has not reported a profit in years, its clout in the publishing industry is tremendous. Even mighty dinosaurs like Random/Penguin are shifting their publishing strategies to compete with the Amazon model (which is to sell lots and lots of stuff for cheap - regardless of quality - while shifting overhead expenses onto independent sellers, in this case, authors). 

There can be no doubt that Amazon's slash-and-burn policies are hurting brick-and-mortar retailers like Barnes & Noble, which rely on higher-priced physical book sales. Other online booksellers are also suffering. In an effort to win back some of Amazon's huge market, Overstock dropped its prices to 10% below Amazon's. The result? Amazon slashed its prices even further, making it impossible for Overstock to even think about turning a profit.

Why is Amazon driving other publishers out of the industry?

Because it can. In spite of antitrust laws, monopolies are the rule of the day in the publishing industry. There are only five major publishers left, which have gobbled up the lion's share of the print market. Amazon is simply following suit. It is also worth pointing out that Amazon is more diversified than traditional publishers. It sells everything. In that regard it is more like Walmart than Random/Penguin. And in the fine Walmart tradition, it stiffs its employees, busts unions, and buys influence.

Money Talks: Politicians Walk

After Jeff Bezos, founder of Amazon, announced he was buying the Washington Post (for a cool $250 million), the media were quick to point out that Amazon's influence had already extended deep into the political realm. 

Amazon is no stranger to hawking its goods to the feds. It was an undisclosed contributor to the Obama campaign, cheerfully donating its cloud infrastructure services, which easily outstripped Romney's unreliable IT.  What's more (conspiracy theorists will love this!), Amazon has strong economic ties to the CIA, which recently signed up Amazon to build a private cloud infrastructure for a tidy $600 million.

According to the FCW's March 18th report: 

"Amazon Web Services will help the intelligence agency build a private cloud infrastructure that helps the agency keep up with emerging technologies like big data in a cost-effective manner not possible under the CIA's previous cloud efforts."

With those kinds of connections Amazon doesn't have to turn a profit on its books. It can run at a loss for decades, which, in some respects, is no different from laundering money through real estate "losses" (a favorite accounting trick of the Mafia).

Too much information

At this point, you, the humble author, are feeling overwhelmed. What has all this got to do with whether you self-publish your book or follow a more traditional  publishing route? And, who do you root for? Amazon, with its open-door policy, or the giants, with their musty, and somewhat self-righteous, air of respectability (which you hope will somehow rub off on you)?

As an author, you should root for neither. As far as the publishing industry is concerned, nobody has your best interests in mind. It's a dirty business. And it's only getting dirtier.

I love getting letters from Random House! They spice up their communications with such truly inspiring phrases: "sacred trust," "supply chain," cutting-edge," "market analytics capabilities," and, most stirring of all, "penetration of emerging markets." (Be still my heart!) 

What does this letter actually mean? Nothing, really. For those who like to read between the lines, one could infer that RH/Penguin feels left out of the ebook market. (We don't feel their pain.) Unfortunately for them, Amazon moves faster and more efficiently than traditional publishers. What's more, Amazon has captured the hearts (and market) of self-published authors everywhere.

Run, Markus! Run!

MARKUS DOHLE
CHIEF EXECUTIVE OFFICER
MEMBER OF THE BERTELSMANN MANAGEMENT SE EXECUTIVE BOARD

July 1, 2013

To Our Authors,

Today, Random House and Penguin are officially united as Penguin Random House. For us, today is a beginning, and I very much want to reach out to you on our first day as a new company, because it all begins with you: you and the books you write and entrust to us to publish. For us, this is a sacred trust, one that before today Penguin and Random House have honored separately. Now it is a commitment and a privilege that unifies us.

Going forward, we will be defined by our mission for publishing with passion the books you write. In our author-focused, publisher-empowered culture, we respect that your most important day-to-day relationship is with your editor and your publishing team, and that will remain untouched at Penguin Random House.

Continuity within Penguin Random House will benefit all of us: The continuity of nearly 250 imprints and publishing houses worldwide, which will retain their individual identities and autonomy. The continuity of experienced, knowledgeable global and local leadership teams, drawn from both Penguin and Random House, who will fully support our publishers in realizing their objectives and your vision for your books. The continuity of vigilant protection of your intellectual property and copyrights.

Over time, as we gradually begin to integrate our companies, we will learn from one another and evolve to better serve you and your readers. With both businesses performing well, we can take our time with this process, to better understand and analyze the complexity and nuances of these important decisions.

One key development I am personally most excited about involves the future investments we will be making on a global scale for growing your readership in all markets. We will be strengthening our supply chain and our support services for physical booksellers while broadening opportunities in the digital arena. We will be developing more cutting-edge marketing tools and programs, further expanding our consumer insights and market analytics capabilities, and continuing to accelerate our penetration of emerging markets worldwide, all of which will allow us to maximize the number of readers we reach on your behalf.

The creation of our new company is the strongest possible affirmation of the future of trade publishing, and of the importance of maintaining strong and vibrant publishing companies, with diverse and innovative editorial teams. Our unprecedented alignment of resources and relationships is built on this foundation: the passionate belief that connecting authors and readers is at the heart of all we strive to accomplish together. On behalf of my colleagues, I deeply thank you for the opportunity to publish your books.

All my best,

Marcus Dohle

Technically, Hyperion bit the dust before it was conceived, but the recent sale of the Disney-owned imprint marks another step in the trend toward reducing the publishing world to a few powerful giants. In this case, Hyperion, whose list includes bestsellers such as Michael J. Fox’s autobiography, “Always Looking Up” and Mitch Albom’s, “The Five People You Meet in Heaven,” will join Hachette, increasing the Hachette Group’s backlist by more than a thousand titles. 

The news should come as no surprise. Hyperion announced it was selling off most of its adult backlist last March in an effort to reorient the imprint “synergistically” with its ABC programming. In this case, synergy does not mean “the combination of multiple elements to produce an effect greater than its parts.” There is only one part: TV. 

The creation of print tie-ins to television shows hardly qualifies as an addition to the content, or the impact, of the original. However, in limiting its scope to what it can profitably sell, Disney is only doing what everyone else in the industry is doing -  hiding from Random House/Penguin and the other Big Five. It is only by focusing on undesirable, or unpoachable, products that everyone else in the industry can escape being swallowed at a future date, or simply being chewed up right now into an unprofitable pulp.

The clock started ticking, not last March when Hyperion announced its backlist sell-off, but last September, when Hyperion president Ellen Archer – known for her forward-thinking views on cutting author advances – hired former talent agent Laura Hopper as editorial director for franchise publishing. This marked Hyperion’s first serious move to increase “product” at the expense of whatever it was writers once did. The following January, Ruth Pomerance, a long-time veteran of the Hollywood talent scene, was brought aboard as senior editor, where she continued to do what she had been doing for the last 30 years – “synergy” (i.e. reformatting books into other media, and vice versa).

In spite of these last-ditch efforts to stay in the game, Hyperion was a lost cause. Transforming TV shows into original content (what we used to call “books”) wasn’t enough to convince the Disney execs that they should stick to their publishing guns.

According to Publisher’s Weekly, Disney announced that it would be retaining its children’s imprints and any media-related titles, such as its Castle series, which ties into the ABC television show about the fictional detective novelist, Castle. In what can only be described as nearly excruciating synergy, the “Castle” books are authored by the fictional character Richard Castle. 

Originally published on Blogcritics.

The world of epublishing is in nearly constant flux.

With big publishers jumping into the fray, it has become increasingly difficult for new authors to make the choice between self-publishing their book as an ebook or signing on with a publisher and letting them handle all the things, including electronic rights.

There are numerous reasons for an author to hang on to as many rights as possible, but nowhere is this more important than digital rights. Why? Because ebooks are selling like hotcakes, and even though publishers charge less money per ebook, authors end up with a significantly smaller piece of the pie.

How does this work?

Publishers spend very little on ebooks. There are no printing costs, no warehouse fees, and no returns. As a result, ebooks cost less. But the reduction in retail cost is not commensurate with the reduction in production costs, which means profits are higher for ebooks.

Because ebooks retail for less, the result is lower royalties for authors. Traditionally, authors make 25% on ebooks, which seems like a lot compared to 10% on hard covers, but the disparity in production costs more than evens the playing field.

According to Brian DeFiore - who serves on the Board of Directors of the Association of Authors Representatives as Chair of the AAR Digital Rights Committee - this is how the deck is stacked in favor of the publisher.

"Every time a hardcover sale is replaced by an e-book sale, the publisher makes $2.20 more per copy and the author makes $1.58 less. If the author made the same $4.20 royalty on the e-book sale as he/she would have on a hardcover, the publisher would STILL be making an improved profit of $6.28."

In short, publishers are increasing profits on the backs of authors.

Are we angry? No, we are just disappointed.

For more details on this inequitable, yet somehow completely predictable, sleight-of-hand read Brian DeFiore's post here.

Article first published as Random House Opens Its Doors to Self-Published Authors, Perhaps on Blogcritics.

Vanity of vanities; all is vanity

With a few famous exceptions, self-publishing, aka “vanity” publishing, is the kiss of death for writers. For aspiring writers hoping to take a seat in the hallowed halls of authordom, launching a novel with a self-published imprimatur was almost like having a scarlet A stitched onto your bodice – as far as the major houses were concerned.

Then, along came Fifty Shades of Grey, originally published as an ebook by an obscure “virtual” publisher in Australia. Within a year, Amazon announced that it had sold more copies of Fifty Shades than Harry Potter. The publishing world was shaken. An ebook, fan fiction no less, had outsold the top-grossing series of all time. Random House, still smarting from having turned down J.K. Rowling, leapt to its metaphorical feet and did the unthinkable. It picked up a self-published ebook. This was a first for the world’s largest publisher, an opening of doors that had, up until now, been almost impossible to enter. It was hailed as a turnaround for the industry. But was it?

Random House’s sudden epiphany - “there’s gold in them thar hills!” - was followed by yet another Eureka moment. Anybody can sell electronic books! Random House immediately threw its hat into the ring, and started its own digital imprints: Alibi (mystery), Loveswept (romance), Flirt (for “New Adults,” whoever they are), and Hydra, a sci-fi imprint aptly named after a multi-headed reptile which was so poisonous even its tracks were deadly. Notwithstanding the ominous association with Greek monsters, Random House held out the biggest carrot of all time: Authors could submit their works, even those “previously published,” directly to Random House, thus bypassing the almost insurmountable hurdle of snaring an agent.

 Naturally, there was a catch – or two.

The first catch was that authors would have to bear the costs of publication. This is also true for self-published authors, though now those costs would be exclusively determined by Random House. The second was that instead of receiving the traditional advance against publication, there would be “profit sharing.” The publisher and author would split revenues 50/50. As it turns out, “profit sharing” is simply a rebranding of the Subsidiary Rights clause of the standard Random House contract, in which proceeds of electronic books, audiobooks, translations, etc. are divided equally between publisher and author.

In short, by removing up-front payments to the author, while simultaneously eliminating all of its own expenses, Random House was imitating a vanity press.  But, unlike vanity houses, they would take half of the profits. Random House was hoping nobody could add.

The Science Fiction and Fantasy Writers Association (SFWA) not only added, they subtracted their members. In a scathing letter sent to its members on March 6, the SFWA stated that it had “determined that works published by Random House’s electronic imprint Hydra cannot be used as credentials for SFWA membership, and that Hydra is not an approved market.”

The reason? “Hydra fails to pay authors an advance against royalties, as SFWA requires, and has contract terms that are onerous and unconscionable. Hydra contracts also require authors to pay – through deductions from royalties due the authors – for the normal costs of doing business that should be borne by the publisher.”

Needless to say, there are serious ramifications from being blacklisted by sci-fi’s largest and most influential writer’s association. Random House was compelled to make an immediate rebuttal.

“We read with interest your posts today about the new Random House digital imprints and our business model,” wrote Allison Dobson, V.P., Digital Publishing Director. “While we respect your position, you’ll not be surprised to learn that we strongly disagree with it, and wish you had contacted us before you published your posts.”

The opening of this letter precisely mimics the simulated regret that politically correct parents employ when punishing their wayward children: We like you, but we don’t like what you did.

Sci-fi wrists duly slapped, Allison now proceeded to the spin, “with a profit-share model … the author and publisher share equally in the profits from each and every sale. In effect, we partner with the author for each book.” Allison describes this partnership as “an all-encompassing collaboration.”

(Translation: We are on your side. We’re really your friends.)

Addressing costs, Allison says, “These costs could be much higher--and certainly be more stressful and labor-intensive to undertake--for an author with a self-publishing model. Profits are generated once those costs are subtracted from the sales revenue. Hydra and the author split those profits equally from the very first sale.”  

(Translation: You’re too young to handle this. Leave everything to us. We know what’s best for you.)

As a disciplinary device, this letter was nothing short of brilliant. It hit every aspiring author’s weak spots in a way that nobody could resist. But Random House has had plenty of practice at this game. These tactics are the stock-in-trade of publishing houses: shining promises, followed by intimidating jargon, followed by incomprehensible terms.

SFWA did not recant, and Random House was forced to comply with the usual standards of print publication. Authors submitting work to Random House’s electronic imprints are now offered a choice of the advance against royalties model, with a royalty of 25 percent of net receipts, and the publisher “will cover production, shipping, and marketing for all formats at 100 percent of cost.”

The day has been won by organized labor, but in reality nothing has changed. Authors still provide the raw materials (for a small percentage), and publishers provide the finished goods for the bulk of the profit. Whether it takes on a new guise, sports a new brand, or appears to adopt a new format, The thing that hath been, it is that which shall be; and that which is done is that which shall be done: and there is no new thing under the sun.

Get the details:

http://www.publishersweekly.com/pw/by-topic/digital/content-and-e-books/article/56244-rh-responds-to-sfwa-slamming-its-hydra-imprint.html

http://www.atrandom.com/eoriginals/index.php (New RH Imprints)

http://www.blogger.com/comment.g?blogID=17222280&postID=6545427618418573673&page=1&token=1364342448331 (Writer Beware blog)

http://www.digitalbookworld.com/2013/sci-fi-and-fantasy-writers-group-condemns-random-house-hydra-digital-imprint/

Shortly after reading the news that Amazon had purchased Goodreads on Publishers Weekly this morning, I received this message from the Authors Guild. Need I say more?

Turow on Amazon/Goodreads: This is how modern monopolies can be built

By Scott Turow

Author's Guild Blog Post 3/29/2013

Amazon’s garden walls are about to grow much higher. In a truly devastating act of vertical integration, Amazon is buying Goodreads, its only sizable competitor for reader reviews and a site known for the depth and breadth of its users’ book 
recommendations. Recommendations from like-minded readers appear to be the Holy Grail of online book marketing. By combining Goodreads’ recommendation database with Amazon’s own vast databases of readers’ purchase histories, Amazon’s control of online bookselling approaches the insurmountable.

“Amazon’s acquisition of Goodreads is a textbook example of how modern Internet monopolies can be built,” said Scott Turow, Authors Guild president. “The key is to eliminate or absorb competitors before they pose a serious threat. With its 16 million subscribers, Goodreads could easily have become a competing on-line bookseller, or played a role in directing buyers to a site other than Amazon. Instead, Amazon has scuttled that potential and also squelched what was fast becoming the go-to venue for on-line reviews, attracting far more attention than Amazon for those seeking independent assessment and discussion of books. As those in advertising have long known, the key to driving sales is controlling information.”

One example should make it clear how formidable this combination is. For “Animals Make Us Human” by Temple Grandin and Catherine Johnson, Amazon has 123 customer reviews, and B&N has about 40 (they report 150, but that figure includes ratings as well as reviews). Goodreads swamps these figures, with 469 reviews and 2,266 ratings for the book.

As an independent platform, Goodreads, with its 16 million members, posed a serious competitive threat to Amazon. No more.

First published on Blogcritics as "How Amazon Killed Barnes & Noble, and Why We Don't Care."

The year was 2010. Stephen Riggio, then CEO of Barnes & Noble, heralded the company's entry into the epublishing world. In a breathless announcement, Riggio euphorically proclaimed that Barnes & Noble would top the 18% mark in e-books "overnight." Not to be outdone by his own enthusiasm, Riggio predicted that Barnes & Noble would earn better margins from e-books than print books. Its booksellers would become, in his words, "e-bookevangelists."

Beware of all enterprises that require new jargon.

Today, even as I write, Barnes & Noble is crashing and burning. According to CNET, the company's earnings slumped an astonishing 63 percent, from $150 million last year to $55.5 million this year. The culprit? Nook.

Over the last quarter, Barnes & Noble watched in horror as Nook sales, their e-book division, plummeted 26%, with losses of over $190 million. It was like watching Icarus fall out of the sky. Stephen Riggio's dream of “overnight” success was so far off the mark, one had to wonder if he was high when he made his announcement two years ago.

Riggio wasn't high. In fact, Nook is a great e-book reader. Anyone who has worked with Nook's .epub files can tell you they are infinitely better than the cumbersome .mobi files used by Amazon's Kindle. Epub files produce a nice, cleanly formatted page that looks just like a book. Mobi files look just like a mess. But, as every entrepreneur knows, better products do not necessarily lead to better sales. So, where did Barnes & Noble go wrong?

Where B&N went wrong

Barnes & Noble had a better product, a better reputation, and a farther reach than anyone else in the book selling business. The problem was that Riggio misjudged – very badly – how to handle the burgeoning business of self-publishing.

With the advent of epublishing, writers who could never hope to see their books in print could get their work to readers without the time-consuming, and usually fruitless, task of trying to snare an agent, followed by the even more frustrating job of trying to hook a publisher. With epublishing, writers could simply upload a file, set a price, and voila! Instant publication. What's more they could do it anywhere, any time. No deadlines, no delays. An equal draw was that writers who epublished could completely control their work. With the elimination of pesky editors who demanded “show don't tell” and required the proper use of apostrophes, everything that went on or between an e-book's cybercovers was entirely up to the writer. To add icing to the cake, writers who epublished got to keep 70-80% of their royalties. Compared to the measly 10% (and that was on a good day) meted out by print publishing houses, it was a no-brainer.

According to Bowker, there were 211,269 self-published titles released in 2012, up from 133,036 in 2010. This surge in self-publishing, owing in large part to e-books, represents not just people “living the dream,” but an enormous business opportunity for anyone with the ability to turn other people's dreams into their hard cash. Barnes & Noble, with its gentlemanly rules of conduct and brick-and-mortar mentality, simply had no concept of how to corner the market. Amazon did.

The coup de grâce - Amazon's KDP Select

Amazon has always enjoyed the top rank in online sales. If you want to buy a book, any book, chances are you'll find it on Amazon. The “beauty part” is that, unlike brick-and-mortar stores, Amazon has minimal stocking requirements. Anybody can sell a book. Amazon merely takes a percentage.

So, when e-books came along, Amazon was already familiar with the rules. Writers could put their e-books up for sale much as they did their used print books. Amazon would take a percentage, and, additionally, provide delivery. Barnes & Noble did the same thing, but the difference – and this is crucial – was that if you enrolled in Amazon's KDP (Kindle Direct Publishing) Select program, you got to give your book away. The catch: You couldn't put your book up for sale on any other site for a (renewable) 90-day period.

Writers quickly discovered that giving an e-book away for free was the fastest, cheapest, and easiest way to build a readership. For the popular genre writers, such as romance and mystery/crime, it was a dream come true. Books in popular genres could rack up 20,000 to 30,000 downloads in a single weekend. Numbers like those would not only be considered a wild success in the print publishing world, they would be virtually impossible. Publishers rarely promote first-time authors.

Cottage industries have sprung up around the KDP Select phenomenon. Numerous websites will not only post which Kindle books are free on any given day, but will review them, and even send daily free titles to your inbox. There is no denying the appeal of getting something for nothing.

For writers, and for Amazon, it is a win-win situation, because free days are fantastic promotional tools. Invariably, free days lead to increased sales. And for those writers who simply must hold their precious darlings in their hands, Amazon also provides print-on-demand. Amazon’s CreateSpace took first place in the self-publishing world last year with 57,602 new titles. Amazon is happy. Writers are happy. Customers are happy. Everybody is happy.

Except Barnes & Noble. Which is dead.

Last week I received this announcement from Random House:

"To Our Authors, 

Our most important mission will always be to publish the work you entrust to us for everyone, everywhere, in every format, and on every platform. That mandate is a primary motivation behind Bertelsmann and Pearson, the parent companies of Random House and the Penguin Book group, signing an agreement this week to combine our respective trade book activities.

One of the defining characteristics of the new company I am most excited about is that it will be author- publisher- and editor-centered – just like Random House. When we join together we will be retaining the distinct identities of both companies’ imprints and you will benefit from an extraordinary breadth of publishing choices and editorial talents and experience. Our Random House imprint leadership remains endowed with creative autonomy, and financial resources, to decide which books to publish, and how to publish them. We expect this to continue in our new business, where we will build on the history and heritage of each of our storied brands. Your relationship with your editor and your publishing team will be unaffected by the new company.

A diversified retail and distribution marketplace for print and digital formats remains a key priority for Random House now, and in the future. Our investments in enhancing the supply chain and our marketing support will supply more services for physical retailers, while expanding our opportunities in the digital space. We expect to create more tools to help you take full advantage of the many online marketing platforms for growing your readership. And we certainly want to continue to expand our Author Portal, which has become an enormously popular and useful resource for so many.

For now, it is business as usual at Random House and Penguin. Soon, we hope to join together to offer an even deeper backlist, alongside our newly published titles. In our partnership, we will be even better positioned to provide copyright protection and support your intellectual property.

Random House and Bertelsmann believe strongly in the future of trade book publishing, and our continuing commercial and cultural success is a major reason why Bertelsmann is extending and expanding its investment and support with the new company. For us, separately and in partnership, it is and always will be about the books. Your books.

All my best, 
Marcus Dohle"

If you are as impressed as I am by large quantities of horse manure, the true significance of this announcement will have completely escaped you. 

So now, boys and girls, we will have a pop quiz.

What is the underlying meaning of the above passage?

a) This merger does not affect me, because I am never going to get published anyway. 
b) WOW! If I ever do get published by Bertelsmann/Pearson/ Random House/Penguin, I'll be famous all over the world, and maybe even in Outer Space.
c) What the hell is a deeper backlist?
d) It is and always will be about the books. Your books.

(The correct answer is: e) We're screwed.)

(The first sentence is the tip-off. Notice the close proximity of the terms: "entrust", "mandate", "mission" and "everyone, everywhere, in every format, and on every platform.")

The reason that the union of the two largest publishers in the world is terrible for writers is unclearly stated in paragraph two:  "we will build on the history and heritage of each of our storied brands." 

The history of these publishing houses has nothing whatsoever to do with storied brands. In fact, it has nothing to do with "marketing support", "platforms", or "supply chains" either. The origin of Random House, as stated by Bennet Cerf,  was "to publish a few books on the side at random."  And so they did. Many random authors, who couldn't find a home elsewhere, were published by Random House (Ayn Rand and Jerzy Kosinski among them).  The heritage of Penguin was to publish Lolita, Lady Chatterly's Lover, and Deer Park, books which had been rejected by scores of publishers (back then we still had scores), and which, once they were finally published, made it onto banned book lists everywhere. 

This is the proud heritage of Random House and Penguin: to publish groundbreaking new ideas without regard to the "market." Because that is the purpose of a publishing house - the dissemination of ideas. 

We will be seeing fewer of them in future.

Bertelsmann, a privately owned company based in Germany, owns publishing, music, and broadcasting companies in 60 countries, including: BBC Books, Multnomah, Triumph Books and the largest English trade publishing house in the world - Random House, which in turn owns Crown Publishing Group, Knopf Doubleday, Crown, Harmony Books, Ten Speed Press, Tricycle Press, Celestial  Arts, Three Rivers Press, Broadway Books, Clarkson Potter, Watson-Gupthill, Back Stage Books, Anchor Books, Doubleday, Vintage, Pantheon Books, Delacorte, Fodor's, Bantam Dell, Del Rey, The Dial Press, The Modern Library, and ... (wait for it) ... One World.